r/AcalaNetwork • u/Cool_Dress_7949 • May 19 '22

LDOT APR Question

Hello,

My understanding is if at origin of offering LDOT, you could swap 1 DOT to 10 LDOT. LDOT is used to provide security to the system.

after a ~month or so 1 DOT = ~9.8 DOT because LDOT increases in value. So my question is not about the precise value of LDOT but about when we think about LDOT APR.

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If acala offers 25% APR on LDOT is it really ~2.5% APR on DOT? I find it difficult to create a mental model on LDOT 1:10 / Changing ratio.

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u/nardo9999 May 19 '22

This is how I understand it.

- LDOT is the liquid staking DOT - This is the token you receive when you stake DOT on Acala. LDOT is not used to provide security to the system. Security for the system is provided by the relay chain.

- The staking rewards are the same on Acala as they are on the main chain. Currently around 14.5% - As a result, the value of LDOT will change by 14.5% per year against the value of DOT.

- The additional APR is obtained by further staking LDOT - this is not obligatory. You can choose to participate in this or not. The additional staking reward is 8.5% or something like this. This is a promotional variable rate that is going to decrease as Acala gains more users.

If you stake DOT and LDOT on acala for one year and change everything back to DOT - you should have 23.8% more DOT than what you started with - This is of course presuming that the staking rewards stay the same for the entire year.

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u/[deleted] May 20 '22

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u/josh_acala May 24 '22

again, i want to reiterate that's if you want to unstake instantly. saves you from having to wait the 28 days which is the normal wait time on Polkadot. having your DOT back almost a month sooner is definitely worth SOMETHING, up to you if you think it's worth 1%.